David N. Kelley, the United States Attorney for the Southern District of New York, and the Lower Manhattan Development Corporation announced last week the sentencing of Allen Klein to six months in prison on charges of defrauding the Lower Manhattan Development Corporation's Residential Grant Program. United States District Judge Richard Conway Casey imposed the sentence on Thursday, January 22, 2004, and further directed the Department of Homeland Security's Bureau of Immigration and Customs Enforcement to begin the process for deporting Klein - a 30-year old British citizen.

Lower Manhattan Development Corporation President Kevin M. Rampe said, "I am so pleased with the outcome of this investigation. The LMDC is committed to ensuring that only fully eligible individuals receive these grants. We will continue to wok with the U.S Attorney's Office to prosecute any individual who inappropriately applied for and received these funds."

According to the charges, court statements, and Klein's guilty plea, Klein submitted an application to the LMDC's Residential Grant Program in an effort to obtain a Two-Year Commitment-Based federal grant made available by the U.S. Department of Housing and Urban Development (HUD) to assist Lower Manhattan residents in the wake of the September 11th attacks. In his application, Klein certified that he currently lived, and intended to live in Lower Manhattan at 71 Broadway. Based on the information provided, LMDC approved Klein's application which made him eligible to receive a total of $12,000 in grant money. Within months of applying for the grant, Klein relocated to Florida and falsely represented his residence in New York.

LMDC began to suspect Klein was no longer living in Lower Manhattan when his grant checks had been returned because his mail was being forwarded to Florida. Although Klein claimed to be caring for his sick aunt and mother, the LMDC initiated an investigation. Within a month, the LMDC's Office of Investigations was able to refer the matter to the U.S. Attorney's Office for the Southern District of New York; and thereafter worked with the HUD Office of the Inspector General and the U.S. Postal Service to have Klein arrested in July 2003, after he picked up a $5,000 grant check. Klein pleaded guilty in September 2003 to theft of government property and mail fraud.

The Residential Grant Program was launched in August 2002, to provide assistance to residents and families who lived downtown on September 11, 2001 and continue to reside in Lower Manhattan, as well as offer financial incentives to new residents who make a two-year commitment to live downtown. The $281 million Residential Grant Program is part of a $2 billion grant from the U.S. Department of Housing and Urban Development (HUD) Community Development Block Grant Program.